A forecast for California on Aug. 16, 2006
Transmission congestion affects both the cost and the efficiency of the electric power grid. Traditionally, transmission congestion has been managed as an engineering or contractual matter, through physical management of the grid or contractual management of "contract paths" for delivering electricity. The use of locational marginal pricing (LMP)—a market-based approach that sends price signals to transmission generators and load-serving entities—uses the grid to encourage the most efficient use of the transmission system.
Global Energy's Market Analytics LMP along with PowerWorld Corp.'s OPF Simulator and Energy Visual's graphical interface solution provides a richly textured visual representation of Global Energy's forecast of transmission congestion in California for Aug. 16, 2006.
LMP Is About Managing Transmission Congestion
By calculating locational marginal prices and plotting them graphically using the Global Energy and PowerWorld software, it is possible to provide a complete zonal to nodal analysis of transmission congestion and the locational marginal price implications of transactions on the grid.
The locational marginal price is the incremental value (marginal cost) of an additional megawatt of energy injected at a particular location, taking into account both generation marginal cost and the physical aspects of the transmission system.